The ghost of Barney Frank

This disgusting politician – Barney Frank – will haunt us for a long time. George Will has a great “overview” of Too Big Too Fail – a policy that caused the banking disasters of the past few decades, a policy that continues and will continue to lead to banking disasters as long as it exists, and a policy that is enshrined in law by the Dodd-Frank act.

From Will’s’ article:

“Capitalism — which is, as Milton Friedman tirelessly insisted, a profit and loss system — is subverted by TBTF, which socializes losses while leaving profits private. And which enhances the profits of those whose losses it socializes. TBTF is a double moral disaster: It creates moral hazard by encouraging risky behavior, and it delegitimizes capitalism by validating public cynicism about its risk-reward ratios.”

Yes, profit and loss.

Though, I disagree with Will on his last point. TBTF does not delegitimize capitalism. This is because any system in which TBTF is a policy is not capitalism; it’s cronyism.

One comment

You are right Josh. Frank and Sen. Dodd both are in the meltdown up to their ass. Bush was blamed but these two pushed the snow ball down the hill. Isn’t funny they both have quit since this all blew up?